Business, international

Transitions for the 90s

Article Abstract:

The annual review of the Economic Council of Canada, which is entitled 'Transitions for the 90s', deals with the effects of a strong Canadian dollar, the federal government deficit, increasing unemployment, high interest rates, and strong inflation expectations. The Council believes that the status quo is not effective due to fragmented decision making and an inflexible economy. There is a lack of coordination of economic policy between different agencies of the federal government and between the federal government and the provinces. Government, business, and labor have only slowly responded to the major changes in the economic environment and show an inability to adapt to market changes. The solution to Canada's economic trouble lies in public sector pricing based on mutual recognition between federal and provincial governments, and closer relations between business and labor.

Canadian productivity

Article Abstract:

An Economic Council of Canada research team studied Canadian industrial and labor productivity. Productivity is one of the major factors effecting Canada's economic competitiveness with the international trading community. Research, which focuses on many aspects of competitiveness, including total factor productivity (TFP), the overall productivity of Canadian production, reveals that TFP has declined severely since 1973. The growth of productivity in Canadian manufacturing industries has slowed down relative to all other Group of Seven nations. The decline in productivity is a result of the appreciation of the Canadian dollar relative to the US dollar, a rise in the real price of energy, and wages rising faster than the other costs of inputs.

Outlook for the economy

Article Abstract:

Projections for Canada's economic future have been published by the government. Slow growth in exports to the US and slowing in the domestic investment cycle will lower annual growth rates to the 2.2% to 2.6% range in 1989 and 1990. The federal deficit is expected to improve because of the slow growth in 1989 and 1990. The balance of international payments should remain at approximately 1.5% of the gross domestic product between 1988 and 1992. Consumer prices will increase by 5% in 1989 because of monetary controls by the government and abundant supplies of grain and oil. Labor productivity is only expected to grow by less than 1% over the 1988 through 1992 period. Unemployment is expected to average 7.6% between 1988 and 1992.